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iANTHUS CAPITAL HOLDINGS, INC. (ITHUF)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 delivered solid top-line growth and margin improvement: revenue $41.6M (+13.1% YoY, +1.7% QoQ) and gross margin 41.4% (+244 bps QoQ) while net loss narrowed to $14.0M; Adjusted EBITDA rose to $3.2M (+$0.4M QoQ, +$2.3M YoY) .
  • Adult-use launches in Maryland and New Jersey were key demand drivers in the Eastern region, offsetting Western region softness tied to promotional activity and lower wholesale volumes .
  • Liquidity/capital-structure actions: New Jersey Bridge Notes extended to Feb 2026 with quarterly cash interest and equity amendment fee; management emphasized NJ as a “key initiative” in 2024, a potential stock catalyst for regulatory and footprint expansion in that state .
  • No formal quantitative guidance or Q1 earnings call transcript was published; S&P Global consensus estimates for Q1 2024 were unavailable, limiting beat/miss analysis. Estimate comparisons are not provided.

What Went Well and What Went Wrong

What Went Well

  • Eastern region momentum from adult-use transitions: “The main drivers for the increase in revenues are from the launch of our adult-use programs as of July 2023 in both Maryland and New Jersey.”
  • Sequential gross margin recovery to 41.4% (+244 bps QoQ), with gross profit up 8.1% QoQ and 10.9% YoY, supported by higher-margin in-house products in Maryland and improved mix .
  • Strategic focus on New Jersey: “We are pleased with the terms of the Amendment because it allows the Company to continue to invest and expand within the State of New Jersey as planned, which is a key initiative for the Company in 2024,” said CEO Richard Proud .

What Went Wrong

  • Western region revenue declined 22.2% YoY with margin pressure from heavier discounting, reflecting competitive dynamics in Arizona and reduced Nevada production capacity .
  • Continuing losses and going concern disclosure: net loss $14.0M; working capital deficiency of $79.5M and accumulated deficit of $1,341.6M cast “substantial doubt” about going concern absent further improvements .
  • Tax-related headwinds: interest and penalties related to income taxes rose; IRS liens reported; assets earmarked for sale to satisfy federal tax obligations, highlighting cash demands from IRC 280E exposure .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Thousands)$42,890 $40,880 $41,564
Gross Profit ($USD Thousands)$17,427 $15,919 $17,201
Gross Margin (%)40.6% 38.9% 41.4%
Net Loss ($USD Thousands)$(15,572) $(18,695) $(13,998)
Net Loss per Share ($USD)$(0.00) $(0.00) $(0.00)
Adjusted EBITDA ($USD Thousands, Non-GAAP)$4,856 $2,798 $3,245

Segment performance and mix:

Segment MetricQ1 2023Q1 2024
Eastern Region Revenues ($USD Thousands)$22,011 $30,226
Eastern Region Gross Profit ($USD Thousands)$10,621 $13,356
Western Region Revenues ($USD Thousands)$14,565 $11,338
Western Region Gross Profit ($USD Thousands)$5,172 $3,845

KPIs and operating metrics:

KPIQ1 2023Q1 2024
Harvested Plant Material – Eastern (lbs)~8,860 ~10,730
Harvested Plant Material – Western (lbs)~1,850 ~850
Product Mix – iAnthus Branded ($USD Thousands)$20,919 $21,201
Product Mix – Third Party Branded ($USD Thousands)$13,678 $15,868
Product Mix – Wholesale/Bulk/Other ($USD Thousands)$2,156 $4,495
Cash from Operations ($USD Thousands)$(787) $1,507
Capital Expenditure ($USD Thousands)$1,002 $878
Cash and Equivalents ($USD Thousands)$13,104 (Dec 31, 2023) $13,620 (Mar 31, 2024)
Dispensaries / Cultivation & Processing Facilities (#)—38 / 8 (as of Q1 2024)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/EPS/margin guidanceFY/Q2 onwardNone disclosedNone disclosedMaintained (no guidance)
New Jersey Bridge Notes termsFeb 2024–Feb 2026Maturity Feb 2024; prior amendment termsMaturity extended to Feb 16, 2026; 12% interest payable quarterly in cash; 10% amendment fee paid in shares; 25% of Non-Operational Cash Receipts >$5M to repay principalAmended
Capital allocation – Asset sales2024N/AMA facility sale ($3.0M; $1.0M at closing + $2.0M over 36 months @7%); NV asset sale ($6.5M; $3.5M at closing + remainder over 36 months @8%) to address tax obligations and portfolio optimizationIntroduced

Earnings Call Themes & Trends

No Q1 2024 earnings call transcript was available; themes summarized from filings and press releases.

TopicPrevious Mentions (Q3 2023 and Q4 2023)Current Period (Q1 2024)Trend
Adult-use expansion (MD/NJ)Sequential revenue growth, margin volatility ; FY/Q4 highlights but limited detail Eastern region revenue +37.3% YoY driven by adult-use in MD/NJ; higher in-house product margins in MD Positive momentum in East
Pricing/promotionsMargin compression vs Q2 in Q3 Higher discounts in FL/NY (competitive) and AZ (retention), impacting margins Mixed; competitive pressure persists
Gross margin trajectoryQ3 40.6%; Q4 38.9% Q1 41.4% (+244 bps QoQ) Improving QoQ
Debt structure/interestOngoing PIK interest on debentures NJ Bridge Notes extended; quarterly cash interest; equity fee; PIK interest continues on other debentures Maturity relief; cash interest burden
Executive/Board changesN/ACFO resignation; interim CFO appointed; director resignation Transitioning leadership
Controls/restatementN/AQ3 2023 restatement due to inventory/consolidation error; material weakness remediation noted Governance risk addressed
280E/Tax liensN/AIRS liens; higher interest/penalties; asset sales earmarked to satisfy obligations Ongoing tax headwind
Asset portfolio optimizationColorado exited by Nov 2023 MA and NV asset sale processes initiated; NV under management agreement pending regulatory approval Streamlining footprint

Management Commentary

  • “We are pleased with the terms of the Amendment because it allows the Company to continue to invest and expand within the State of New Jersey as planned, which is a key initiative for the Company in 2024.” – Richard Proud, CEO, on NJ Bridge Notes extension .
  • Eastern growth drivers: “The main drivers for the increase in revenues are from the launch of our adult-use programs as of July 2023 in both Maryland and New Jersey.”
  • Margin mix: “Gross profit decreased due to higher sales discounts offered to customers in both Florida and New York… This was partially offset by an increase in gross profit in Maryland as we continue to produce and sell more higher margin in-house products.”
  • Leadership transition: “We would like to thank Philippe for his contributions… The Company has initiated a comprehensive search for a permanent Chief Financial Officer.” – Chairwoman Mich Mathews-Spradlin .

Q&A Highlights

  • No Q1 2024 earnings call transcript was found; the company did not publish a Q&A session for the quarter. Therefore, no analyst Q&A themes or clarifications are available [ListDocuments returned none for earnings-call-transcript].

Estimates Context

  • Wall Street consensus estimates via S&P Global for ITHUF Q1 2024 were unavailable; as a result, comparisons to consensus for revenue, EPS, or EBITDA cannot be provided. Estimate comparisons are not included due to data limitations.

Key Takeaways for Investors

  • Eastern region adult-use momentum is the core growth engine; expect continued mix benefits from in-house brands in Maryland and operational progress in New Jersey, supporting margin stabilization. Citations: .
  • Western region remains challenged; promotional intensity and reduced Nevada capacity weigh on revenue and margin—watch for NV asset sale timing/regulatory approvals and broader footprint rebalancing. Citations: .
  • Capital-structure runway improved with NJ Bridge Notes extension to 2026, but quarterly cash interest adds ongoing cash demands; equity amendment fee diluted shareholders. Citations: .
  • Tax/280E headwinds are material: IRS liens and rising interest/penalties necessitate asset monetization—closing MA/NV deals is a near-term liquidity catalyst. Citations: .
  • Sequential gross margin improvement and positive operating cash flow ($1.5M) are encouraging, but going concern language underscores urgency to execute on asset sales and operational efficiencies. Citations: .
  • Leadership changes (CFO, director) and Q3 restatement elevate governance focus; track remediation of material weaknesses and stability of the finance organization. Citations: .
  • Near-term trading: narrative catalysts include NJ expansion updates, MA/NV transaction closings, and any regulatory developments affecting adult-use markets; lack of published guidance and limited sell-side coverage may amplify headline sensitivity.

Sources:

  • Q1 2024 8-K press release and tables .
  • Q1 2024 Form 10-Q financial statements, MD&A, segments, tax and legal disclosures .
  • NJ Bridge Notes amendment 8-K and press release .
  • Q4 2023 8-K press release and tables .
  • Q3 2023 8-K press release and tables .
  • Restatement of Q3 2023 8-K .
  • Executive and director changes 8-Ks .